Hopes for a sustained rebound in the building industry have dwindled as indicators point to slower growth in the second quarter. Still, growth in most sectors remains positive, although not as robust as previously anticipated. Builders nonetheless continue to be optimistic, pointing to signs that the economy is strengthening.

In its Construction Outlook for the second quarter of 2015, industry consultancy FMI has readjusted its growth forecast for the year downward, to 5 percent from 8 percent in the first quarter.

Even so, it projects total construction put in place will reach its highest point since 2008 by the end of the year. The report forecasts growth in most nonresidential sectors in 2015, with commercial (13 percent), lodging (12 percent), office (11 percent) and amusement/recreation (9 percent) leading the way.

Growth is expected to be low or flat in health care, education and religious uses. Longer term, growth will slow between 2016 and 2019, to between 5 and 7 percent in most sectors. Residential is on a path toward 8 percent growth this year and should hold steady at that rate through 2019. Multifamily will continue to experience double-digit growth into 2016.

Dodge reports May construction starts increased three percent (compared to a 10 percent increase in April over March), largely due to substantial investments in nonbuilding projects. Overall, Dodge’s Construction Index gained five points in May, reaching 154, and total construction was up 25 percent over the same time last year.

Residential building rose 2 percent, while multifamily increased 7 percent. Nonresidential building, on the contrary, fell 28 percent as a group. Commercial and hospitality gained, and manufacturing and office declined.

Some of the sizable swings between April's and May's numbers result from the impact of unusually large projects on the index. Dodge’s analysts foresee fewer such projects in the second half of 2015, predicting an annual growth rate of 10 percent.

Expectation that spring weather would rekindle home building fell flat as housing starts dropped more than 11 percent in May, according to a release from the National Association of Home Builders. On the other hand, permit issuance was up 11.8 percent, indicating that builders are expecting demand to increase in the coming months.

NAHB reports that its homebuilder confidence index jumped to 59 in June, a nine-month high. NAHB Chairman Tom Woods commented, "Builders are reporting more serious and committed buyers at their job sites."

Housing construction at the moment appears to be stuck between availability of current stock (existing home sales increased in May to their highest pace in six years, according to the latest figures from the National Association of Realtors) and buyer constraints, such as "still tight lending standards, high student debt, and the preference by millennials to stay with rental units in urban areas," says Robert A. Murray, chief economist for Dodge Data & Analytics."

Noting that price gains in both rents and existing homes were putting a squeeze on many would-be homebuyers, NAR Chief Economist Lawrence Yun pointed out the need for solid gains in new home construction to meet demand.

One of the biggest challenges for construction across the industry is affordability. Whether it’s new home construction or building for health care, education or retail, the cost of construction is making new projects prohibitive for many individuals, governments and companies.

Restoration, repurposing and remodeling are outstripping new construction as more affordable and more desirable options. Financial institutions, builders and government need to come together to explore solutions that will better meet the needs of the industry and those it serves.